Jakarta. The Asian Development Bank (ADB) announced Friday that it had approved a $500 million policy-based loan for the coal-reliant Indonesia’s energy transition.

According to ADB, the money will support various policy measures for Indonesia to slash its emissions under the so-called enhanced nationally determined contribution document and the net-zero power emission targets by 2050.

It will also focus on establishing a robust policy and regulatory framework for energy transition, including the development of the Comprehensive Investment and Policy Plan (CIPP). The CIPP document lays out the technical details related to the Just Energy Transition Partnership (JETP) -- a $20 billion climate funding package that aims to help Indonesia wean off coal. Half of the funding comes from the public money of advanced economies such as the US, Japan, and France, among others.  

“This policy-based loan program supports Indonesia’s foundational and collaborative policy development to identify and address the sector’s complex challenges to accelerate its shift towards sustainable and clean energy,” Jiro Tominaga, the ADB country director for Indonesia, said in a statement.

ADB also works alongside Agence Française de Développement (AFD) and German Development Cooperation through KfW as its co-financing partners. 

The loan announcement came not long after President Joko “Jokowi” Widodo called for accessible financing to fund energy transition when Jakarta hosted the Indonesia-International Sustainability Forum.

Over the years, ADB has been providing loan and grant commitments to Indonesia. ADB reported that it had committed 836 public sector loans, grants, and technical assistance worth $46.3 billion to Indonesia as of the end of 2023.

Its sovereign portfolio in Indonesia included 26 loans worth $7.34 billion. Early this year, ADB unveiled a $419.6 million loan to improve the sanitation systems in the Indonesian cities of Mataram, Pontianak, and Semarang